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After pandemic pause, WARN Act amendments set to take effect
Matthew Fazelpoor//January 30, 2023
Earlier in January, Gov. Phil Murphy signed legislation that will enact new layoff protections under the state’s Worker Adjustment and Retraining Notification Act after the changes were postponed because of the COVID-19 pandemic.
The legislation, which Murphy originally signed in January 2020, amends the Millville Dallas Airmotive Plant Job Loss Notification Act, also known as the New Jersey WARN Act. The changes were originally supposed to take effect in July 2020. The COVID emergency Executive Order 103 put that all on hold. And since that EO is still in effect, lawmakers had to introduce a new bill to change the effective date of the amendments that were no longer tied to the order.
In December, that measure – Assembly Bill 4768/Senate Bill 3162 – was passed in the Senate 32-2 and in the Assembly 65-13, before Murphy signed it into law on Jan. 10. Under the new legislation, the amendments will take effect 90 days after enactment, April 10, 2023.
The law increases from 60 to 90 days the advance notice that employers of 100 or more full-time workers must give when there is a mass layoff, plant closing or transfer that will result in 50 or more employees losing their jobs. That is higher than the federal WARN act, which requires 60 days’ notice. New Jersey was also the first state in the country to enact a law guaranteeing severance pay in the wake of mass layoffs.
Significant changes under the new law include: a requirement that employers provide discharged employees with severance pay equal to one week of pay for each full year of employment; a lower threshold for mass layoffs to those affecting at least 50 employees; counting part-time employees in the covered threshold and being entitled to 90 days’ advance notice and severance pay; and an expanded definition of “establishment” to include either a single location or group of locations, including any facilities in the Garden State. If employers do not give the full 90 days’ notice, they would have to provide four additional weeks of severance pay as a penalty. Waivers of the severance requirement must be approved by the commissioner of Labor and Workforce Development or a court.
“This is the right and decent thing to do to ensure that employees who lived up to their end of the bargain are provided with adequate notice and compensation when an employer engages in mass layoffs,” said Murphy. “I want to thank Sens. Cryan and Madden for standing up for the hard-working families of New Jersey.”
After watching the fallout of the Toys R Us closing and other business shutdowns and bankruptcies, the sponsors decided to take action to protect employees who are often left jobless and without severance compensation. The sponsors say that that the bankrupt companies are often purchased by private equity firms and hedge funds that impose massive layoffs while top executives walk away with millions of dollars in bonuses.
“Now is time to put these worker protections into place,” said Sen. Joseph Cryan, D-20th District. “Companies and hedge fund managers have been exploiting bankruptcy laws to protect their profits while workers lose their jobs, their paychecks and severance pay. The workers were left in the dark and cheated out of deserved compensation while the companies were pillaged for their resources. The law will help protect the rights of the workers from these abuses.”
“When companies fall on hard times, and are going through significant layoffs, it is necessary to ensure severance for hard-working employees,” said Sen. Fred Madden Jr., D-4th District. “With growing fears of additional mass layoffs, especially within the tech industry, this law is more crucial now than ever to ensure that workers are given the adequate notice and support.”
“In these still stressful, uncertain times, finding and hanging on to a job is a critical part of life for working families,” said Sen. Nellie Pou, D-35th District, a sponsor of the original bill that Murphy signed in 2020. “When a large company unexpectedly closes, their employees are often left out in the cold with little in the way of compensation, and little lead time to locate another job. Workers of New Jersey deserve at least some protections against sudden employment, and this law will help provide that cushion.”
As Pou noted, the signing and pending enactment of this law comes amid broader economic uncertainty with many large corporations recently announcing some form of layoffs and trimmings of headcounts, and the potential for more on the horizon.
Business leaders and advocacy groups around the state, such as the New Jersey Business & Industry Association and New Jersey Chamber of Commerce have expressed some concerns with the law and what it means for employers and the business community more broadly here in New Jersey.
“Mass layoffs are unfortunate circumstances that in many cases arise as last resorts for businesses,” Alexis Bailey, NJBIA vice president of government affairs, told NJBIZ in a statement. “We acknowledge the goal of ensuring workers are protected during these difficult situations but are concerned with the impact this new law will have on our regional competitiveness and the logistical challenges it may present for employers.”
Michael Egenton, executive vice president of government relations for the state Chamber of Commerce, told NJBIZ that as the clock winds down for these changes to take effect, the organization’s next steps include getting guidance and feedback from the state Department of Labor as officials weave these amendments into the existing regulatory rules and structure, as well as discussions with members about the potential effects.
“And as we get all that information then we can make an assessment,” Egenton explained. “If we find that there are some discrepancies, some particular issues from the general business community, then hopefully we can engage both the regulators at Department of Labor and, maybe even, the Legislature if we need to revisit.”
“But the first course of action is let’s get something from Department of Labor to see how they translate the legislation that the governor just signed,” Egenton added.
